I think that the massive explosion of really high-quality smaller games means there’s ultimately less money to go around from buyers…

I don’t think it’s so much that, as it is getting lost in the crowd. I’ve never heard of this game until just now, and I haven’t heard of half of the games you listed. There’s plenty of money to go around (just look at how well the Steam Deck has done), but nobody will buy your game if people can’t find it.

And that’s why big companies often do well by default; they have massive advertising budgets, so reaching their share of the market is often much easier.